Solredime

The curious case of politics

Solredime — Wed, 27 Jan 2010 15:21:00 GMT

How should voters determine what politician to vote for? Who is “able” and “competent” enough to rule over others? If one were to accept the premise that somebody has to lead the nation by force (one which I do not accept), how would voters decide who to choose?

Well, a reasonable way would be to look at past experience: “Let us look then and see, how they manage their concerns – they for whose cause we are to labour, devote ourselves, and grow enthusiastic.” Let us see how the person performed when they had the same means at their disposable as anyone else, as you and me; if they truly managed to harness their talent and transform society for the better.

People like Henry Ford, one of the first to successfully apply assembly lines in mass production, directly brought down the cost of automobiles, and indirectly influenced other industries to mass produce in similar ways. Perhaps it is such people that should be considered viable candidates.

For surely a man who more than doubles the wages of his workers from his own money¹ is far more worthy of praise than morally bankrupt politicians who are able merely to redistribute what is not theirs.

One is compelled to remember Lord Acton's eminent observation that “Power corrupts, and absolute power corrupts absolutely.” A statement for which, as though it were not already unnecessary given ample historical examples, empirical proof is being developed². And if it were not bad enough that power can corrupt good people, voters elevate to high stations people who from the very outset seek power.

If a man such as Henry Ford is performing well for society, is it perhaps not precisely because of their constraints? He must not only compete with others for the satisfaction of peoples' wants; but he has no privileges that set him above others³, no power except that which he has earned, and this power could evaporate the moment he mistreats his customers.

By what inane logic would you promote one who is doing well, to a position where whether they do well or not no longer affects their power or revenue? A position where they have neither need, nor incentive, nor ability to be competent. Who in their right mind, would actually make the effort of enacting the Peter Principle⁴? Why would people surrender exactly those rights which protect them from men of power?

Something is wrong when voters willingly promote incompetent men from positions of relative harmlessness to that of absolute power.

For those interested, the why was answered in Étienne de La Boétie's Discourse on Voluntary Servitude.

Still, I find it fascinating, that in this day and age when the rejection of gods has become quite fashionable; that those same skeptics who profess incredulity with matters of religion, suddenly act like gullible infants when it comes to politics. That they would build a cult of personality for their idols, suspend their faculties of reason, and worship a man as they would not dare worship a god. You have not freed yourselves, but merely replaced the uncertain slavery of organised religion with the inevitable servitude inflicted by man.

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1. http://www.americanheritage.com/articles/web/20060105-henry-ford-five-dollar-day-model-t-ford-motor-company-assembly-line-james-couzens-highland-park-detroit-automobiles.shtml

2. http://www.economist.com/sciencetechnology/displayStory.cfm?story_id=15328544

3. Actually, Ford used patents to secure his advantage over competitors, but this too was only permitted by the government.

4. http://en.wikipedia.org/wiki/Peter_Principle

Can deflation end unions once and for all?

Solredime — Tue, 29 Dec 2009 10:11:00 GMT

It is often remarked that the existence of unions is proof of the inefficiency and failure of markets to pay workers adequate wages. That workers, as a great multitude with little individual influence, must form socialistic collectives in order to provide a counterweight to the great power wielded by corporations. Moreover, since unions have virtually no power of their own, and must be granted special rights and privileges by governments; governments themselves becomes exalted as an entity both capable of, and requiring intervention in markets.

The usual counterarguments are that theoretically, wages ought to be kept sufficiently high due to competition for labour between corporations themselves. Historical examples can often be quoted to support this view. In 1914 Henry Ford almost doubled wages to $5 a day (more than 110 dollars in current terms) in order to attract workers from his competitors, and he was able to do so largely due to the incredible efficiency he had achieved using machinery and conveyor belts, technologies ironically regarded by some as altogether destructive of employment. Some go further to say that government intervention through taxation, regulation, anti-trust laws, etc., restricts competition in the first place, helping to create this problem.

And thus unions' existence is first ensured by government intervention, and then enabled through it. Yet there is something even more fundamental and sinister at work in making unions necessary, which seems to have, to my knowledge, gone largely unaccounted for.

This is the factor of inflation. All modern states exist in an almost permanent state of price inflation, infrequently interspersed with bouts of deflation, or fears thereof caused by disinflation. It is my belief, that this is the most fundamental reason for which unions can exist. If the role of a union is to raise wages for its members, and a currency is being devalued from year to year, were workers to continue being paid the same nominal wage, then their real wage would be going down. Thus, unions exert power upon employers to raise nominal wages in line with inflation. Firms themselves are often unwilling to raise wages because to do so they must also raise nominal prices – something highly unpopular.

Firms often end up absorbing a part of inflation through efficiency gains and timorousness in raising prices. We already know from game theory that oligopolistic markets face a kinked demand curve, that any firm individually raising prices will lose market share, and that the only "fair" solution to this for all firms involved would be an illegal cartel raising prices in accordance with inflation simultaneously.

If governments pursue a doctrine of inflation, then nominal prices, which are sticky upwards, will have difficulty being raised in line with inflation, causing firms to underpay employees in real terms, leading to a clamour for unions.

If, on the other hand, governments pursue a doctrine of price deflation due to a stable money supply, then as the supply of goods and services increases, their prices will fall as firms vie for market share in price wars beneficial to consumers; while employers will have a hard time reducing nominal wages, which are sticky all the more so downwards. Thus will the real purchasing power of employees rise, without the need for unions, and in accordance with productivity increases passed on through a competitive slashing of prices.

P.S. I am fully aware that a corporation itself is a collectivist legal construct manifested only through government help, i.e. limited legal liability, acts of incorporation, etc. and as such is not an entirely free market phenomenon, making socialist criticism of corporatism as an example of the inequity of free markets as a cheap straw man, if one they may be unaware of.

Non-scarcity of intellectual property

Solredime — Fri, 07 Aug 2009 09:55:00 GMT

Scarcity can be defined as the ownership of something tangible which necessarily excludes others from using it. Thus, if I own a fork, I exclude others from using it, unless I either give it away or temporarily transfer availability of it to someone else, which in turn means I cannot at that point in time use it. Should someone steal it from me, the act of theft can be characterised by two features. First, the transfer of property is involuntary on the part of the original owner, and does not involve mutual consent. Second, the transfer of ownership excludes the previous owner from using the property – that is to say, if someone steals my fork, I can no longer use it.

Intellectual property, on the other hand, is not a scarce resource. If I see you making a sandwich and decide to make one myself using my own bread and cheese, I am not taking away your idea from you – you still have possession of your idea. When I make a sandwich based on your idea, you do not lose your own ability to make a sandwich. Ideas themselves are therefore not in principle scarce economic goods. Having said that, you could certainly create artificial scarcity by hiding your idea of making a sandwich from me, and thus try to imbue your idea with added value due to its newly acquired scarcity. Such means of protecting ones' ideas are in my opinion perfectly valid.

If however you were to try to stop me from making my own sandwich once I had already acquired the idea, you would be violating my very real physical property rights. You would in fact be restricting the ways in which I can use my physical property (bread and cheese), and in so doing would also be laying claim to ideas inside my mind, violating my self-ownership too. This contradiction between self ownership and physical property rights on the one hand and intellectual property rights on the other cannot logically be valid, since intellectual property rights can only come about as a consequence of self-ownership and physical property rights. You must first own yourself, in order to own your ideas. Of course, there is nothing stopping you from getting me to voluntarily sign a contract agreeing to not disclose your idea to others, or to use it in limited ways, but such a contract must be explicit, and signed by both parties.

If one were to assert that the copying of another's idea, and its subsequent mass production is damaging the owner of the original idea, then using that same logic, if two people were to try to get a job where only one placement exists, the person who gets the job should be held liable for hurting the other person. But this reductio ad absurdum works precisely because there is a critical misconception here. In the case of a job, what is lost is not owned. In other words, the person who fails to pass an interview for a job does not lose the job itself, but merely the opportunity of obtaining this job. Since opportunities are not one's property, indeed – opportunities are usually created by others for us to take advantage of, then the loss of an opportunity as a result of someone else does not constitute a crime. To try to instate a system as to the contrary would require violation of the rights of the employers and other creators of opportunity. Oh wait...

In any case, it is scarcity that makes property rights both necessary for a well-functioning society that wishes to avoid the perennial tragedy of the commons problem, and it is scarcity that provides the ethical justification for property rights and against theft, since theft of scarce resources actually does hurt the original owner – by excluding them from their possessions.

Likewise then, we can apply this to piracy. Let us take, for example, movie piracy. If I were to download a movie from the internet (assuming I did not explicitly and voluntarily sign a contract with the producer restricting my use of the product), and then sell DVDs of this movie to other people at a lower price than the original DVD producer was selling them at – this does not represent theft. The loss of sales that the original producer experiences is not a loss of property, and so cannot possibly constitute theft. This is because all sales are opportunities – they may or may not occur, and when I undercut the original DVD producer therefore taking customers away from them, this is merely a manifestation of market mechanics in which they fail to price their goods adequately (usually due to monopoly power) or fail to protect their ideas through non-coercive means, and therefore lose the opportunity to sell their goods to some people. Thus, intellectual property can only be safeguarded through secrecy or explicit contracts with the users of said property, if it is to remain consistent with the idea of self-ownership.

It is also worth addressing the argument that actually, ideas are scarce. It is claimed that ideas have scarcity because it is difficult and costly to obtain certain knowledge, skills, experience, etc. Take the example of teaching. To acquire an education implies a certain expense, regardless of who pays for it. Yet this is primarily because teachers are often scarce – especially good teachers, and both teachers and the act of teaching constitute a physical good or action in the real world. Moreover, it is the teachers' constraint of time, and the limited amount of teachers, that does not enable them to spread their ideas more freely. It is thus the natural limitations of the physical world that cause the transmission of ideas to be scarce – not the ideas themselves.

a poem

Solredime — Wed, 05 Aug 2009 09:17:00 GMT

Born of the fire,
Fuelled by desire,
Rises an idol
forsaken by hell.

This spirit of madness,
the terror it wrought.
None now remember,
the havoc it sought.

Enslaving our minds
in the shackles of hate.
Its emblem was blood,
but its enemy fate.

Yet now it revolves,
breeds anew its disorder.
With merciless lies,
it coerces the truth.

It proclaims itself light,
yet its veil obscures all.
In the darkness of plight,
it destroys wherewithal.

When will the truth,
the beauty of love.
Send spite its venom,
send soaring the dove.

How long must wait I for people to sober,
how long will fools praise what's always in vain.